Corrects prices in paragraph 5
Indonesian thermal coal prices held steady in a thinly traded market, with little in the way of firm transactions coming to light.
There is a view among a number of market participants that import quotas at Chinese ports — which have curbed demand for several months — could be relaxed from the start of 2019. This has fueled an increase in enquiries from Chinese buyers over the past week, which in turn has helped to give some support to prices of low-calorific value (CV) Indonesian product, although there is still a lack of clarity surrounding the policy and there has been no official announcement.
Bids and offers for January-loading shipments of GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) Indonesian coal were relatively steady compared with yesterday, with bids at around $30/t and most offers at around $31/t, although there is talk in the market that some producers may have raised their offer prices to as high as $32/t. Bids for Supramax GAR 4,200 kcal/kg cargoes by comparison were at around $30-31/t last week, with most offers at around $31/t for January-loading shipments. Deals involving this type of coal were concluded in a $29.80-31/t range last week, with the price at which transactions were concluded rising as the week progressed.
The ICI 4 derivatives market, which clears on the CME, was also quiet today with little in the way of transactions coming to light. But there are indications that interest may be starting to increase further along the curve, with an offer for March derivatives emerging today at $33/t.
December contracts were bid at $30.50/t today, with January and February contracts bid at $31/t.
February contracts were bid at $31/t today. A total of 45,000t of ICI 4 derivatives have cleared on the CME so far this month, taking the total volume to have been cleared on the CME since the contract launched in February to around 1.75mn t.
Trade was also subdued elsewhere in the Indonesian physical market. Offers for January-loading GAR 5,000 kcal/kg (NAR 4,600 kcal/kg) Panamax cargoes were around $46-47/t. By comparison, a trading firm last week received a firm bid for a January-loading Panamax cargo of slightly higher quality GAR 5,100 kcal/kg material from another trading firm at $48/t, after a deal involving the same type of coal was done earlier in the week at $47/t. An early January-loading Panamax cargo of the same coal also traded at $48.25/t last week, while Argus assessed last assessed GAR 5,000 kcal/kg prices at $46.67/t on 14 December, down by 14¢/t compared with the previous week.
Trade was also relatively quiet in the Australian market. A 25,000t January-loading parcel of NAR 5,500 kcal/kg Australian coal was bid at $61/t and a 50,000t February-loading shipment at $61.25/t fob Newcastle, although offers were scarce. A December-loading 65,000t Panamax cargo of this coal that traded yesterday for $60/t on a fob Newcastle basis was confirmed to be heading for China, in another potential sign that market participants see Chinese import restrictions loosening from the beginning of next year.
But prices continued to decline in the Chinese market, with offers for domestic NAR 5,500kcal/kg coal at around 610-615 yuan/t ($88-89/t) fob northern China ports today, down from Yn615-620/t yesterday. Chinese utilities appear to be unwilling to pay above Yn610/t for the coal. The latest offers and bids compares with Argus' most recent assessment of Yn618.58/t ($89.50/t) fob Qinhuangdao on 14 December.
In China's futures market, the January contract on the Zhengzhou Commodity Exchange closed at Yn594.2/t today, down by Yn3.8/t compared with yesterday. The May contract closed at Yn559.6/t, down by Yn3/t.
